Small Shop Talk: Caught in the Act!
Oh, no! Your worst fears have been realized. You walked into the shop and caught your best technician loading a box of inventory into his personal vehicle. Caught in the act, stealing! What do you do?
I visited with lots of contractors - what did they do? I consulted a lawyer - what's the best way to handle these situations? Here are a few ideas to help you plan your strategy should you catch someone with a hand in the cookie jar.
My intent is to get you thinking about what you would do in a theft situation, not to give you iron-clad legal advice. Termination litigation is big business. So, here's the de rigueur disclaimer: When faced with a sensitive employment issue, seek the counsel of a suitable attorney. And, while these are real stories, all the names have been withheld to protect the innocent.
That said, what have others done when faced with theft?
The Case of the Missing Invoices"Sure, I was ripped off," said one contractor. "I speculated that our service manager had a drug problem. He looked bad, and he had lost a lot of weight. He seemed fidgety all the time. Then, I noticed that there were dispatches on the dispatch log that never resulted in an invoice. I wondered what was happening on those calls. The techs turned all their paperwork over to the service manager at the end of the day. I guessed that the manager was pocketing the cash sales and throwing out those invoices.
"I suspected the service manager of drug use and theft, but I had no proof. We didn't have any systems in place to be certain that either problem was more than my imagination.
"First things first - we contacted a drug screening company and established firm policies on drug use. We tested everyone, and, sure enough, the manager tested positive for cocaine.
"Our drug policy stated that we would provide help and rehabilitation services to employees with drug problems. The manager willingly entered the program. I was pretty proud of our decision to help this guy turn his life around.
"Then, I confronted him about the missing invoices. He flat out denied any wrongdoing. Again, I beefed up our policies. I worked with the dispatcher to create a system that would match each invoice with the dispatch and the payment. Numbered invoices were issued to each technician. A missing invoice would be charged to the technician for the amount of the repair typical for the dispatch.
"We never caught the service manager stealing, but the problem of missing invoices disappeared when we put the system in place. Not long after that, the service manager tested positive on a random drug test and we let him go. Interestingly, after he left, several other employees told me that they were glad he was gone. They questioned why I had let him stay on so long in the first place. But, without any proof, I was afraid to fire him! Instead, I chose to wait him out. I put the procedures in place. When he failed the drug test a second time, it was a clear-cut case for termination.
"This whole situation was hard on me and the company. However, we now have policies that will prevent this from happening again. Frankly, I don't think we would have gotten around to creating those policies if we hadn't had been pressed into it."
Evaluating Your OptionsWhen creating your drug and alcohol policies, you can choose a no-tolerance position. You may want to terminate immediately any person that tests positive. Or, you may want to adopt a "will help rehabilitate" posture. Check out your options.
Do you need proof to fire someone? It depends. If you operate in an "employment at will" state, you may dismiss an employee for any reason as long as it is not a discriminatory act. For instance, you can't say, "I am firing you because you are gay." You can't fire someone on the basis of sexual orientation, color, race, religion, or sex. You can tell an employee, "Your services are no longer required. I am letting you go."
At this point, the employee can request a "service letter" from you, explaining why you let him go. You are required by law to respond to this request. Unless you have experience with a service letter request, seek out a competent lawyer to help you. There is protocol for this letter for both you and the employee. Basically, in the service letter you must divulge the reason you fired the employee. The information in the letter is private, usually delivered via certified mail. Therefore, the contents of the letter cannot be deemed defamatory. Do not spout off to all within earshot that the employee ripped you off. Such a public opinion can be deemed slanderous and damaging and you could face civil action from the terminated employee. If you choose to use your rights as an employer in an "employment at will" state, keep your mouth closed.
Now, if you have an employment contract with an employee, the "employment at will" protection disappears. For instance, if you have a union contract with an employee, you are bound by the disciplinary procedures in that contract. If you have an employee manual or handbook, it could be interpreted as a contract. This issue is argued in courts across the country daily. Be aware of this as you create your manuals. I visited with a contractor who was advised by his lawyer not to have an employee manual at all! The reasoning: the "employment at will" position made it easier to fire employees.
But, do you really want to capriciously fire anyone for any reason? I hope you said, "No!" Goodness knows, good employees are hard enough to hire, much less fire. But, in the case of theft, you do want to be able to let the offender go without repercussions. The first story provides ample evidence of the importance of putting systems in place that address drug use and accountability. Write the employee manual. Put in policies for operations. Establish your disciplinary procedure. Follow through. Don't be afraid. Just be careful. Check with your lawyer about what you should put in and what you should leave out.
Rest assured, lying and stealing are legitimate grounds for dismissal.
Moonlighting Mayhem"One of my technicians tracked me down in the parking lot after work," said another contractor. "He nervously told me that one of the other guys was operating a pretty healthy moonlighting business. The moonlighter would tell our customers that he could come by on the weekend and do the work for a deeply discounted price. Using company parts and tools, the guy was making lots of money. I confronted the guy, and he admitted it right off the bat. I wrote him his final check and he left without a fuss. But the fellow who had turned him in turned in his notice the next day. He said that he was uncomfortable around the rest of the crew. They hazed him for being a snitch."
Your employees will probably know there is a theft problem before you do. But is it safe for them to blow the whistle? Some companies are using services that help employees report in-house crimes anonymously. Check out www.etheft.com. The Employee Theft Anonymous site allows employees to report workplace fraud, theft and abuse. A toll-free number is also provided for those that feel uncomfortable submitting the information over the Internet. An employee can fill in details of the problem and instruct ETA to contact the appropriate person at his company to take action. Ask your insurance provider for companies who provide that kind of discreet service.
This is a very sensitive situation. Nobody likes a tattletale. But if the survival of the company is threatened, shouldn't somebody blow the whistle? You should never fire an employee on an unverified report. Keep the information confidential and make sure your accountability systems are operational. Is the truck inventory off? Are the invoices accounted for? Have "happy calls" verified that the owners refused service? Use the systems to uncover the moonlighting. Address the offender without implicating the informant.
Call the Cops!Are you wondering, "Can't I just call the police and report the theft?" My sources tell me that the police are not likely to make an immediate arrest. Police are used to investigating both sides of the story. If the accused employee asserts that the money was really his, that you owed it to him for some reason or another, the police may view the crime as a dispute over money, not a clear case of theft. They might suggest that the two of you work it out on your own.
Most employers do not press charges. They are content to be rid of the offender and avoid a lawsuit. When faced with the legal costs of pursuing the case, it just doesn't seem worth it. And, very few employers gather real evidence. Those that do follow through with legal action must have rock solid evidence and a deep belief that it is the right thing to do.
You can get insurance that will cover employee theft. It is probably not in your general liability insurance. Check into it as an additional rider. Or look into bonding your employees. Your insurance company will wholeheartedly pursue the thief if their insurance money is on the line.
There is no single way to handle an employee who rips you off. Do you take him to the wall? Do you let him go? Do you make him pay it back? Do you forgive him? The lawyer I interviewed for this article had an interesting story about one of his clients. The client owned a several retail stores. Through an audit, he discovered one of his managers had embezzled over $100,000. During a teary confrontation, the manager claimed that he was in deep financial trouble and he acted out of desperation. He wanted to pay back the money and make amends to his boss.
Together, they agreed that the manager would pay back the money by cashing in his 401(k) account. So, the manager took the penalty and the tax burden and paid back the company. He still works at the same job.
The owner felt like he had done a good thing. He allowed the offender to repay the money and hoped that he had turned over a new leaf. A desperate man may do terrible things. He forgave the fellow.
Maybe it was a good deed.
But, maybe it was an irresponsible act. Is he putting the rest of his employees, the ones who didn't steal, at risk by continuing to employ an admitted thief?
It's a tough question.